Sheep in distance in green paddock

The upward price trend proved short-lived, with an influx of lambs and sheep supply resulting in a sizeable drop in prices this week. Demand couldn’t keep up with big flows of stock in NSW and in SA compared to recent weeks.

The Eastern States Trade Lamb Indicator fell 5% over the week to end at 552¢/kg cwt. The ESTLI has now returned to the lows of a fortnight ago. In the West, trade lamb prices held steady week-on-week at 521¢ due to limited availability.

Heavy lambs are now testing new five-year lows. The National Heavy Lamb Indicator fell 30¢ over the week to end at 576¢/kg cwt. This is 165¢ or 22% lower year-on-year. Light lamb prices headed lower in all states this week as supply proved overwhelming. The National Light Lamb Indicator dropped 62¢ to 440¢/kg cwt, which is around 30¢ above the low of early June.

The Merino and Restocker lamb markets were met with a similar fate. The Merino Lamb Indicator lost 70¢ over the week to 438¢/kg cwt. The National Restocker Lamb Indicator dropped 83¢ to 420¢/kg cwt. Restockers in Victoria sold on average 30¢ higher than in NSW and 40¢ higher than in SA.

Mutton followed the cheaper trend, losing 25¢ over the week to end at 334¢/kg cwt. Angus Brown looked at mutton export demand this week (read here) and found that increased sheep supply from Australia was finding homes in Asia and the Middle East. In fact, we have exported more mutton in the last few months than for 20 years which is adding pressure to the market.

Early yardings reports from this week are already showing the large jump in supply this week that sent the market lower. Over 180K lambs were yarded nationally which is about 25% more than the week prior tally of 145K. In both NSW and SA, saleyard throughput lifted, returning to levels that we haven’t seen since May, while in Victoria numbers remained relatively steady. Mutton throughput also lifted to the highest level in three weeks, with over 73K sheep yarded nationally.

Next week

The wet weather in the south is expected to continue in the week ahead, particularly for Tasmania and Victoria which may impact supply in those regions.  Southern NSW is also in with a chance for another drink according to the BOM. It’s probably not enough to get prices surging, but any tightening of supply should be enough to keep them steady at least.

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Click on graph to expand

Click on graph to expand

Data sources: MLA, Mecardo

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